Financial Fitness Winner No. 34, Tamara Burrowes

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“When I was on public assistance, I used my credit card a lot. I was getting just under $400 a month [in welfare benefits],” says the 29-year-old single mother of Morgan, 12, and Jamal, 5. Burrowes describes welfare as a “sad cycle of life” because many people stay on public assistance to get the benefits of reduced rent, food stamps, and Medicaid. “It’s more of a struggle when you are in a low-income bracket; there is no one helping you with your bills. [Before welfare,] I had trouble with my finances because all the jobs I had were low-paying,” she explains. She was living paycheck to paycheck, earning less than $20,000 a year.

“My goal was always to find a higher-paying job because I knew I had skills. While on public assistance, I decided to go back to school to improve myself. I ended up getting a full-time job and going to school for free,” says Burrowes. Today, she is earning a B.A. in both marketing and accounting, but she ultimately wants to be a contract attorney. Burrowes started out earning $27,000 in her job as a program assistant, but currently grosses $34,000 annually. She anticipates getting future pay raises, thus pushing her into an even higher income bracket. “My five-year plan is to buy a house, complete law school, save for my kids’ college education, and secure my financial future for retirement.”

THE ADVICE
Like many people, Burrowes is clueless about how much money flows in and out of the household. She needs to create, and stick to, a budget to determine how much discretionary income she has after expenses. She has $1,000 in savings, $6,350 in debt, and $650 in a 457 Plan (a salary reduction plan for nonprofit and public employees). To help Burrowes get a better handle on her finances, BLACK ENTERPRISE had her consult with financial advisor Walt Clark, president and CEO of Clark Capital Investments in Columbia, Maryland. Ideally, Clark says Burrowes ought to contribute 8% to 10% of her net salary each year to emergency savings and another 10% to retirement savings. If she discovers that money is tight, she must make a concerted effort to cut costs. As long as she continues to get pay raises and avoids the common trap of buying things instead of building assets, Clark believes Burrowes will be in a position to save and invest more. His other recommendations are